The provincial department says anyone using water from the Little Bow or the Travers Reservoir should close their intake until further notice.
The department says in a news release that about 9,800 litres of urea ammonium nitrate, a commonly used liquid agriculture fertilizer solution, was accidentally released from a container on private property.
The release occurred on land northeast of the Village of Carmangay in Vulcan County.
Alberta Environment says it is awaiting results from sampling but issued the advisory as a precaution.
It says water users in the area are being contacted.